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FISCAL POLICY INNOVATIONS IN RELATION TO ECONOMIC GROWTH *
Author(s) -
Colm Gerhard
Publication year - 1966
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1966.tb00842.x
Subject(s) - economics , fiscal policy , capitalism , economic expansion , dominance (genetics) , government (linguistics) , politics , economic policy , economic system , macroeconomics , biochemistry , chemistry , linguistics , philosophy , political science , gene , law
SUMMARY Is fiscal policy in support of economic growth such a potentially important factor that one might say that it could modify the nature of American capitalism? With‐out going into the question of definition of capitalism it is assumed here (1) that the market forces alone would not assure realization of a desirable rate of growth, and (2) that a market system in itself is inherently unstable and subject to economic fluctuations. For policy in support of economic growth it is necessary to combine a steady expansion in aggregate demand with specific Government programs and tax measures designed to strengthen the economic potential and to remove obstacles to economic growth. The feasibility and requirements for success of such a fiscal policy are elaborated by discussing specific objections which could be raised, namely: (1) that a continuation of such policies may lead to ‘cold socialization’ (2) that such policies have an inadequate leverage effect for influencing sufficiently the private sector; (3) that such policies may lead to continuing inflation; (4) that our knowledge of the growth process is inadequate and that political decision makers may not adopt economic advice. These considerations lead to the conclusion that fiscal policies may modify essential characteristics of capitalism as we have known it in past history or as it has been pictured by antagonists. Fiscal policies should not be merely ‘fiscal’ in the conventional definition of the term but must be related to other government programs, to monetary policy, to income policy, and to informational and political adaptations.